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SPENDING PANEL WOULD BOOST PROCUREMENT SPENDING: The Senate Appropriations Committee meets at 10:30 a.m. today to approve its defense spending bill for the next fiscal year. And ahead of the markup, POLITICO snagged a copy of the not-yet-released draft committee report, which is available here, for Pros: http://politico.pro/1mibnei

The bill would provide $549.3 billion for the Defense Department, including $59.7 billion in supplemental war funds, called the Overseas Contingency Operations account. The topline figure is a drop from the $572 billion enacted for DoD this fiscal year and $550.7 billion requested by the White House for next. The measure would boost procurement accounts by $1.7 billion above what was requested — and, conversely, cut funding for operations and maintenance and research and development.

The bill would also…

... CUT THE WHITE HOUSE COUNTERTERROR FUND: The committee report says the White House hasn’t provided a “sufficiently specific plan” for how it would spend the $4 billion requested for the military as part of its new counterterrorism fund. The Appropriations Committee would provide just $1.9 billion for the fund, available for two years — instead of the requested three. The panel would also provide $1 billion in operations and maintenance funds "for additional counterterrorism partnership activities under existing authorities.”

… URGE THE PENTAGON TO RECONSIDER A SECOND ENGINE FOR THE F-35: The committee report calls for a reassessment of the 2011 decision to kill an F-35 alternate engine made by General Electric and Rolls-Royce, in light of troubles with the current F135 engine made by United Technologies subsidiary Pratt & Whitney. The engine "has experienced numerous problems, including the failure of an oil flow management valve and a pre-take-off fire in the past few weeks," the committee report says.

The report highlights the frustration in Congress over recent F-35 setbacks, including the fleet-wide grounding lifted earlier this week. House Armed Services Chairman Buck McKeon told us this week it was a mistake to kill the second engine — but also said it was too late to restart the program. “I think most people know that having one engine is going to end up costing more than two engines, because you’ve got no competition,” the California Republican said.

In a statement, UTC spokesman Marty Hauser said the “decision to only have one engine for the [Joint Strike Fighter] was made by Congress and the DoD more than three years ago, and the F135 engine continues to perform exceptionally well.” POLITICO’s Herb has more: http://politico.pro/1nKGC6O

And the Senate Appropriations Committee’s markup of its defense spending bill will be streamed live here: http://1.usa.gov/1kaXFdm

IT’S THURSDAY. Welcome to Morning Defense, where we’re wishing a happy birthday to German Chancellor Angela Merkel, who turns 60 today (hat tip: The New York Times). Keep the tips and pitches coming to awright@politico.com, and follow us on Twitter @abwrig and @morningdefense

FIRST LOOK #1 — PAUL RYAN SAYS OCO MUST NOT BECOME A ‘SLUSH FUND:’ Deputy Defense Secretary Bob Work and Joint Chiefs Vice Chairman Adm. Sandy Winnefeld are returning to Capitol Hill again to discuss the military’s $59 billion OCO request for next fiscal year. This time, they’ll be appearing at 10 a.m. before the House Budget Committee, chaired by Rep. Paul Ryan (R-Wis.).

In his opening remarks, Ryan will say OCO should not be used to “pay for our long-term needs,” according to excerpts obtained by Morning D. “There is widespread agreement on this committee that we need to carefully budget for our war-time needs and also that the war-funding designation must not become — in the words of the ranking member — ‘a slush fund,’” Ryan will say. “If the Defense Department does not have enough resources to meet our defense needs, then we should increase the base defense budget.”

Yesterday, HASC members expressed concerned about the scope of the OCO request, especially the counterterrorism fund, which Rep. Mac Thornberry (R-Texas) likened to a "piggy bank." POLITICO’s Herb and Philip Ewing have more: http://politico.pro/1jQsGZv

FIRST LOOK #2 — DUNFORD IN THE HOT SEAT: The Senate Armed Services Committee is meeting at 9:30 a.m. to consider the nomination of Gen. Joseph Dunford to be the next Marine Corps commandant. Dunford, currently the top U.S. commander in Afghanistan, isn’t expected to face much resistance but will face pointed questions about the Afghanistan drawdown plan.

SASC top Republican Jim Inhofe of Oklahoma “plans to discuss with Gen. Dunford the recent agreement to conduct a full audit of the Afghan presidential runoff election results as well as concerns about the president’s plan to draw down forces based on arbitrary timelines instead of the facts [on] the ground,” a spokeswoman tells us. “Inhofe will also be interested in Gen. Dunford’s assessment of the level of risk the Marine Corps is being forced to accept under the budget cuts as it trades future readiness and investments to address the current readiness crisis.”

TOP STORY AT HOME — OBAMA UNVEILS NEW RUSSIA SANCTIONS, via POLITICO’s Ewing and Jennifer Epstein: “President Barack Obama slapped Russia with another batch of economic sanctions on Wednesday for its incursions into Ukraine, including new restrictions on Russian government leaders, major banks and even the maker of the iconic Kalashnikov assault rifle.

“Among those sanctioned were a top Russian spymaster, a Ukrainian separatist leader, a top lawmaker and Moscow’s minister for the Crimea, which Russian troops seized in an armed incursion earlier this year. The Treasury Department also sanctioned Russian arms manufacturers, parts of energy companies and financial institutions.”

In the White House briefing room, Obama said “Russia has failed to take any of the steps” he’s called for to de-escalate the situation in Ukraine. http://politi.co/1nzhX0h

TOP STORY ABROAD — ISRAELI OFFICIAL SAYS GROUND INVASION LIKELY, via Jodi Rudoren of The New York Times, from Tel Aviv: “Even as Israel and Hamas agreed to suspend hostilities briefly on Thursday at the request of the United Nations, a senior Israeli military official said that his government was increasingly likely to order a ground invasion of the Gaza Strip that it had hoped to avoid.

“Though Israel initially set limited goals of halting the rocket assaults against it and degrading Hamas, the Islamist movement that dominates Gaza, the group’s tenacity and surprisingly deep arsenal have led to widespread calls to expand the mission. The military official said only ‘boots on the ground’ could eradicate terrorism from Gaza and indicated that Israel was even considering a long-term reoccupation of the coastal territory.” http://nyti.ms/1mU7vVm

“The individual contributions from Lockheed and Boeing executives come on top of the $21,000 Frelinghuysen received from defense contractors’ political action committees in the second quarter, including $4,000 from Boeing’s PAC and $1,000 from Lockheed’s, according to the Federal Election Commission filing submitted [Tuesday].” More here, for Pros: http://politico.pro/1qgydeL

MAKING MOVES — FORMER COAST GUARD BOSS TO BE SPECIAL REPRESENTATIVE TO THE ARCTIC, via USNI News: “The recently retired head of the U.S. Coast Guard has been appointed as a special ambassador to the Arctic, according to a Wednesday announcement from the U.S. State Department. Retired Adm. Robert Papp will, ‘lead our efforts to advance U.S. interests in the Arctic Region as the State Department’s Special Representative,’ according to the statement credited to Secretary of State John Kerry. … As commandant of the Coast Guard, Papp was a leading voice on Arctic policy.” http://bit.ly/1kyziGK

SPEED READ

-- A Pentagon plan to help the Syrian rebels would use the requested $500 million to train a 2,300-man force, which some lawmakers say is too small. The Wall Street Journal: http://on.wsj.com/1yvatDO

-- Sgt. Bowe Bergdahl's new attorney says the former Taliban hostage “is deeply grateful to President Obama for saving his life." The Daily Beast: http://thebea.st/1nJZBhX

-- The Pentagon notifies Congress it plans to transfer six Gitmo detainees to Uruguay. The Associated Press: http://huff.to/1rj0Szc

-- In his first testimony before Congress, Acting Veterans Affairs Secretary Sloan Gibson requests $18 billion for more medical staff and hospital space. Military Times: http://goo.gl/1NkGrP

-- A new study shows that medical procedures known as “damage control resuscitation” that help treat massive blood loss from combat wounds have been saving lives. Marine Corps Times: http://goo.gl/D6JZ3a

-- The case of 1st Lt. Nadiya Savchenko, Ukraine’s first female military pilot who was captured in Russia and is accused of killing two Russian journalists, intensifies tensions between the two countries. USA Today: http://usat.ly/1qHHbNG

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